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Continued single-digit growth in residential building activity

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Building activity with regard to new private sector-financed housing in South Africa continued to grow at single digits in the first eight months of 2015 compared with the corresponding period in 2014, based on data published by Statistics South Africa. However, growth in activity levels in both the planning and construction phases of new housing remained largely segment driven up to August.

Year-on-year (y/y) growth in the number of new housing units for which building plans were approved came to 6,8%, with a total of just more than 41 000 units planned since January. This growth was largely driven by the segments for houses less than 80m2 and flats and townhouses, with these two segments showing combined growth of 10,1% y/y to a total level of 29 855 units in the eight-month period.

The volume of newly constructed housing units increased by 7% y/y to a total of more than 25 000 units in the period January to August this year. This growth was largely the result of a relatively strong improvement of 14,5% y/y in new houses built to an overall total of 18 028 units. The number of new flats and townhouses built dropped by 8,1% y/y in the eight-month period. However, flat and townhouse developments normally take quite some time to complete as a result of the extent of construction activity, with the growth of almost 10% y/y in the planning phase of these types of housing so far this year expected to be reflected in the construction phase at a later stage.

The average cost per square metre of new housing built came to an average of R6 055 in the eight months to August, which was 5,3% higher than in the corresponding period last year.

Building costs per square metre were as follows in the various segments of housing in January to August this year:

  • Houses of <80m2: R3 844, up by 11,2% y/y.
  • Houses of ?80m2: R6 301, up by 4,1% y/y.
  • Flats and townhouses: R6 921, up by 8,3% y/y.

Residential building activity will continue to be driven by trends in and prospects for the macro economy (economic and employment growth, inflation, interest rates, etc), household finances (income, savings, debt, credit-risk profiles, etc) and confidence levels (consumer and building confidence). These factors, together with aspects such as building costs, the process of property rezoning where applicable, the availability of municipal services and the extent of the planning and construction phases eventually affect new housing demand and supply trends, as well as the timing and timespan of building activity.

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Alan Straton

Chief Cook, Bottle Washer and Broom Mechanic at MyPE
Passionate about Port Elizabeth and definitely NOT packing for Perth. Alan's ethos is epitomised in the words of Nelson Mandela; "I have fought against white domination and I have fought against black domination. I have cherished the idea of a democratic and free society. If need be, it is an ideal for which I am prepared to die." See more articles by Alan.